November 5, 2024 – The Supreme Court (SC) has said in a landmark verdict today that not all privately owned properties will qualify as community resource which the State can take over for the common good.  

A nine-judge bench of the SC, led by Chief Justice of India (CJI) DY Chandrachud, gave this ruling on the question whether State can take over private properties to distribute to subserve common good. It explained that not all private property can be deemed “material resource of the community” for redistribution in Article 39(b) of the Constitution.

The case involves Article 31C of the Constitution, which safeguards laws enacted by the State to carry out directive principles of state policy. These are guidelines that the Constitution establishes for governments to abide by when enacting laws etc. Article 39(b) is one of the statutes protected by Article 31C and according to Article 39(b), the State must focus its policies on making sure that the community's material resources are owned and controlled in a way that best serves the general welfare.

In 1977, in State of Karnataka v Shri Ranganatha Reddy case, a seven-judge bench had ruled with a 4:3 majority that all privately owned property did not fall within the ambit of material resources of the community. However, Justice Krishna Iyer had been of the view that under Article 39(b), both public and private resources fell within the ambit of "material resources of the community".

The SC judgment today was delivered with an 8-1 majority. Three judgments were written - CJI Chandrachud wrote the majority ruling for himself and Justices Hrishikesh Roy, J.B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih. A partially dissenting opinion was delivered by Justice BV Nagarathna while Justice Sudhanshu Dhulia disagreed with the CJI.

Decades of SC law on the matter have in principal been overturned by the ruling in the Constitutional reference, which had been pending since 1992. A line of judgements that both public and private resources fell within the ambit of “material resources of the community” under Article 39(b) were based on the minority opinion by Justice Iyer whose view had been affirmed by a 1982 Constitution bench in Sanjeev Coke Manufacturing Company Vs Bharat Cooking Coal Ltd case.

The majority opinion of the SC has now disagreed with Justice Iyer’s views. Justice Nagarathna disagreed with the CJI on his observations on the ruling by Justice Iyer.